TMI Blog2009 (11) TMI 1027X X X X Extracts X X X X X X X X Extracts X X X X ..... ors is not in the party array nor the State, even though it is stated that the private complaint has now transformed into a criminal prosecution. 2. I have heard Sri Veeresh R. Budihal and Prashant Goudar, learned Counsel for the petitioners and Senior Advocate Sri Shantanu, learned Counsel for respondent No. 1, who have at length urged for and against the relief sought for in the petition and have supplemented their arguments drawing citational support from various decisions of this Court and the Apex Court. 3. Before I advert to the grounds so urged by both sides, a brief reference to the factual matrix, needs reference. 4. The first respondent herein, a Company incorporated under the Companies Act in the name and style of M/s. India Sugars and Refineries Limited, Chittawadigi, Hospet, claims to be in business established as Sugar Factory from 1933 and while being in such business, claims to be engaged in manufacture of sugar in the State of Karnataka with its factory situate within the territorial limits of the learned jurisdictional Magistrate, before whom the case is now pending. As the sugar cane has been declared as an essential commodity under the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the complainant: Such inducement was deliberately to defraud the complainant and thereby cause loss. Reference is also made to the pivotal role played by Raitara Sangha with the petitioners herein for supply of sugar cane from the reserved area in contravention of the standing orders issued by the Central Government and also the State Government. Thus, it is alleged that the Company namely, M/s. Shree Renuka Sugars Ltd., in contravention of the control order and in active connivance with the Raitara Sangha, thereby, committed the offence of criminal breach of trust punishable under Sections 403 and 405 of IPC. It is further alleged that forewarning issued by the complainant to the accused to desist from such act, through a notice was of no avail. 8. To sustain its charge against the petitioners and the company they represent, it is alleged that on 28.11.2008, the complainant did its best to stop the illegal transportation of sugar cane from the reserved area of the complainant through a representation to the Deputy Commissioner, (the competent authority under the provisions of the Sugar Control Order), but, he also failed to take appropriate action, which encouraged the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectively. It is alleged the only intention of the complainant is to block the sugar cane growers of its reserved area, from supplying the sugar cane to the factory of their choice and had filed writ petition in W.P No. 31532/2008, in which writ petition, the Circuit Bench of the High Court at Dharwad declined to grant any interim order as seen from the order dated 05.12.2008 The writ appeal against-the said order dated 05.12.2008 in W.A No. 5139/2008 is also, another attempt of the complainant to prevent the sugar cane growers from disposing off the yield. Dismissal of the said Writ Appeal is pointed out as a circumstance to show that the conduct of the complainant was not fair and its interest was only to prevent sale and produce of the sugar cane by such litigations. 13. As regards allegation of contravention of the Sugar Cane (Control) Order is concerned, the petitioners vehemently deny having indulged in any act, within the mischief of the said Order and they would also contend that there is no illegal procurement of sugar cane by the Company M/s Shree Renuka Sugars and there is no violation of any standing orders. 14. Apart from denial of charge levelled against the Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cane (Control) order, 1966 and undisputedly, they had knowledge of the things. It is alleged that each one of the petitioner had actively participated in the process of procurement of the sugar cane in contravention of the standing order and had also been a party to prevent sale of sugar cane from the reserved area by the sugar cane growers to the complainant. Reference is made to the notice issued by the complainant to the petitioners informing them of their misdeeds and calling upon them to desist from such indulgence holding threat of legal action. Learned Counsel would further contend that each one of the petitioner had by himself or herself participated in negotiation for purchase of sugar cane from the sugar cane growers directly, which was done by them in their personal capacities for the benefit of the Company they represent and to the detriment of the complainant. Therefore, they have to answer the charge against their overt act. He would submit that presumption of guilt is available against the person, who at the time of commission of offence was the Managing Director or the Principal Officer of the Company and that presumption would continue to apply even to the categor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is juristic person. Undoubtedly, the provisions of Section 10 of the E.C Act permits prosecution against the Company, if offence is said to have been committed by it. The Company, being a juristic person, to prosecute it, necessarily the provisions of Section 305 of the Code of Criminal Procedure has to be invoked. Section 305 of the Cr.P.C reads thus: 305. Procedure when corporation or registered Society is an accused. (1) in this Section, corporation means an incorporated Company or other body Corporate, and includes a Society registered under the Societies Registration Act, 1860 (21 of 1860). (2) Where a Corporation is the accused person or one of the accused persons in an enquiry or trial, it may appoint a representative for the purpose of the inquiry or trial and such appointment need not be under the seal of the Corporation. (3) Where a representative of a Corporation appears, any requirement of this Code that anything shall be done in the presence of the accused or shall be read or stated or explained to the accused, shall be construed as a requirement that that thing shall be done in the presence of the representative or read or stated or explained to the repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention. (2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other, officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation. For the purposes of this Section, (a) Company means any body corporate, and includes a firm or other association of individuals; and (b) director in relation to a firm means a partner in the firm. 21. From the Phraseology of sub-section (1) of Section 10, it is clear that there is element of presumption of guilt against the person, who at the time the contravention was committed, was in charge of and was responsible to the Company for the conduct of the business of the Company. In other words, such a person, who was in char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not responsible for the contravention. Pertinently, it is to be noticed that the words used in sub-section (2) is if proved, which pre-supposes sufficient material proof to establish that such person (covered by subsection (2) by his or their consent, connivance or attributable negligence, indulged in the crime. If we keep this definition in mind and examine the fact situation in this case, it was imperative the complainant should have made statement on fact, to indicate with clarity overt act of each of the persons arraigned as accused to establish a prima facie case to proceed against them. But, perusal of complaint shows the allegations are general in nature. It will be appropriate to refer to the nature of allegations in the complaint, which sets to rest any doubt on this point. 11. The complainant states that while they were undergoing turbulent times with their business, particularly with ryots growing sugarcane in the reserved area of the complainant-company, the accused Nos. 1 to 11 named above, with dishonest and fraudulent intention, induced the said ryots to remove and deliver to them, the sugarcane earmarked for the complainant as per law. Upon the dishonest indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rohibiting sale and supply of sugarcane grown in the reserved area to any other factory other than the complainant-company. In view of the said order of the Deputy Commissioner, Bellary the accused No. 1 Company is not supposed to purchase/receive any sugarcane from the said reserved area and any violation thereof would amount to an offence under Section 7 of the Essential Commodities Act and thereby, they are liable for prosecution under the provisions of the Essential Commodities Act, 1955. Despite the said order when the illegal lifting of sugarcane from the reserved area continued unabatedly, then the Deputy Commissioner, Bellary, issued another Order dated 24.12.2008 whereby he directed the Assistant Commissioner, Tahasildar and Deputy Superintendent of Police of Hospet to prevent the said illegal transportation of sugarcane and also to seize the vehicles involved in such illegal transportation. It would also be pertinent to state herein that in the case of Siruguppa Sugars and Chemicals Ltd., named above, which was also illegally lifting the sugarcane from the reserved area, the Deputy Commissioner, Bellary, has issued totally four orders dated 04.01.2009, 05.01.2009, 15.01.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of bringing the offence under the mischief of Section 403 of IPC, dishonesty in the transaction must have affected the owner there of, namely, the sugar cane growers. Even under Section 405 of IPC, it is necessary to prove that the accused (petitioners herein) were in any manner entrusted with the property or with any dominion over the property, had converted to their own use that property dishonestly or disposed of the same in violation of any direction of law to the detriment of the actual owner. How far these provisions would be available to prosecute the Company is a different matter, but, as far as the petitioners are concerned, we expect at least a statement on fact as to how the property was entrusted to or in what manner there is dishonesty in its appropriation. 25. Learned Counsel for the petitioners has further referred to para 13, wherein the complainant has averred that it had issued a legal notice dated 31.01.2009 to all the accused (petitioners herein) informing them that the act of purchasing sugar cane from the reserved area would amount to offence under Section 7 of the E.C Act. The averments in the said para are also of no avail for the reasons expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r name called. The distinction between Manager and Managing Director is that, while the Manager by virtue of his office has the management of whole or substantially whole of the affairs of the company, the Managing Director has to be entrusted with such powers of the management as may be thought fit. The powers of management are required to be delegated upon the Managing Director, either by an agreement with the company or by a resolution passed by the Board of Directors in its general meeting or by virtue of its memorandum or article of association. It is not the name by which the person is called but the position, he occupies and the functions and duties which he discharges that determines whether in fact, he is in charge of and responsible to the company or not. Taking this distinction into consideration, there need not be a presumption of accused No. 3 being in-charge of or responsible to the company for production of objectional drug. Although Food Inspector has obtained information from the company itself that the respondent No. 3 is the Managing Director, further details such as agreement between him and the company or resolution passed by the Board of Directors etc., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt observed in para No. 12: In the above context what is to be looked at during the stage of issuing process is whether there are allegations in the complaint by which the Managers or Directors of the Company can also be proceeded against, when the Company is alleged to be guilty of the offence. (Emphasis added) The complaint contained averments that accused persons i.e, Directors/Managers/Partners of M/s. Mohan Meakins were responsible for constructing the proper works and plant for the treatment of their highly polluting trade effluent so as to conform to the standard laid down by the Board. It also alleged that accused persons were deliberately avoiding, to abide by the provisions of the said Act. It was in the light of factual averments in the complaint, the Supreme Court was of the view that the Directors and Managing Directors of the company were liable to be proceeded against according to law. In the matter at hands, except the bare statement that accused Nos. 3 and 4 are the Directors of the company, there are no averments that they are in charge of or responsible to the company, not even in the form of bald statement. 29. From the said judgement, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re appears to be no dispute as far as petitioners 1 and 2 are concerned, who have themselves described their designations. As far as petitioner No. 1 is concerned, she claims to be the Chairman and Director while the second petitioner claims to be the Managing Director. 32. For the reasons discussed in the paras supra, petitioners shall succeed in their legal pursuit. The proceedings initiated against petitioners 3 to 11 in PCR No. 4/2009 now converted into CC No. 309/2009 on the file of Principal Civil Judge (Jr. Dn.), JMFC, Hospet for the offences punishable under Sections 403, 405, 424 and 421 of IPC and also for the offences punishable under Sections 7 and 8 of Essential Commodities Act, 1955, are quashed. Consequently, the order dated 11.3.2009 summoning them to answer the charges is also quashed. 33. As this Court by its order dated 11.6.2009 in Crl.P No. 7354/2009 has set aside the impugned order against the principal offender M/s. Shree Renuka Sugars Limited (accused No. 1) and has remanded the matter to the Trial Court for reconsideration, the impugned order in CC No. 309/2009 (PCR No. 4/2009) in so far as it relates to petitioners 1 and 2 (accused Nos. 2 and 3) is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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